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The Costs (and Rewards) of Owning a Food Truck

2015-08-24

Minyang Jiang

If you’re a restaurant owner looking to expand your business, you might be researching the best neighborhoods for your next location, or carefully planning how you’ll pay for the massive start-up costs. But there’s an alternative road you can follow that makes restaurant expansion simpler, cheaper, and a lot more nimble: Buying a food truck.

Food Truck vs Restaurant 

Our friends at VendingTrucks.com helped us put together this fantastic white paper laying out all the advantages of running a food truck operation, even for restaurateurs who already have established brands. (That’s right — food trucks aren’t just for culinary newbies anymore.) So before you open another brick-and-mortar location, consider the following:

Food Trucks Have Cheaper Startup Costs: Opening a brick-and-mortar restaurant will cost you $500,000 for your first month of operation, on average — and that’s if you’re renting the building. If you choose to construct a new building yourself, your costs could reach $1 million.

By comparison, a custom fabricated food truck will only cost you about $50,000-$150,000, depending on the equipment you need installed. And instead of paying a small fortune in personnel costs — think about all the waiters, busboys, and hosts you need to keep your brick-and-mortar restaurant running smoothly — staffing a food truck requires just two or three people to serve your mobile clientele.

Food Trucks Go Everywhere: With a brick-and-mortar restaurant, you’re stuck in one place, hoping that customers show up. With a food truck, you can go where the most demand is on a given day. Locations like busy downtown areas, college campuses, music festivals, and sporting events all have hordes of hungry potential customers, just waiting for you to serve them

A food truck is also a fantastic tool for market research, especially if you’re committed to opening another brick-and-mortar restaurant in the future. Want to know if your food will be well received in a particular neighborhood? Set up shop for a few weeks on different streets in the area you’re considering, and you’ll have all the feedback you need.

 

A lot of restaurants think about starting a food truck because they can take their existing business on the road. They see food truck ownership as a cheap and easy way to get more customers, get into new markets, and build profits. While it’s true that owning a food truck can help a business reach out and get into markets they may not be able to get into otherwise, the myth that operating a food truck is cheap is one that should be addressed.

How Much Does a Food Truck Cost to Start?

Food trucks only need a few employees, as opposed to the larger number you’d need for a physical restaurant location. Additionally, you won’t need to sign a lease on a building where your restaurant is housed. If you have an established eatery, you already know about the costs to open and maintain a restaurant. Food truck ownership probably seems a lot cheaper by comparison, but it’s important that you check out the true numbers before you make a decision.

Still, you need insurance on that truck, and that can often be $2,000 per year or more. Some pay up to $4,000 per year to insure their food truck. Some cities have requirements for permits and licensing, along with commissary costs, which can cost you $1,000 per year or more.

This might not sound so bad compared to a brick and mortar restaurant, but you also have to buy and properly equip your truck. Food trucks can be purchased for as little as $15,000, but most restaurants end up spending at least $50,000 by the time they get everything in just the way they like.

A Cheap Food Truck Isn’t the Way to Go

When you’re considering how much to spend on a food truck, keep in mind that people will identify that truck with your brand. If you get something low quality, that will be the association people have with your restaurant. You don’t want to move into a new market and get a bad reputation because you didn’t want to spend money on your truck. While it’s not necessary to buy the most expensive one you can find (some food trucks cost up to $150,000), it’s very important that your truck is good quality. It should run well, be big enough to use it the way you want, and look great.

When you buy a cheap truck, you make a statement about your brand quality and what you’re willing to spend to make customers happy. Because most food trucks make or break their business on looks before anyone tries their food, you need a truck that attracts people. If you’re testing your restaurant in a new market, people there may not have heard of you. They won’t be judging your brand name, so you need to entice them to come over and try your food. A clean, well-maintained, newer-looking truck is going to do that much more easily than an old clunky one.

Is a Food Truck a Good Investment?

Despite the initial investment and the ongoing costs, a food truck can be a great investment. Food trucks are becoming more popular in big cities, and even in some medium-sized locations and smaller towns, so there’s no reason for your restaurant to avoid getting involved.

You can use a food truck to test out new markets where you don’t have a presence yet, in order to see if people there are receptive to your menu. By having a mobile presence, you can move from one market to the next as needed, and test out many different places. This can help you decide where to open another location, and which areas might not be good economical choices for your restaurant.

If you use your truck as a test market, you may find that it pays you back quite easily in information that can help you expand your restaurant the right way. However, you have to be prepared for the costs and understand how much you’ll be spending before you make the leap.

If you don’t figure out the costs for your particular restaurant based on the size of the truck you want, the number of employees to staff it, and other factors, you could end up spending much more than you anticipated, making the food truck a poor choice for your particular situation.

Thinking of taking your restaurant on the road in a food truck? Read more about business loans for food truck! Contact Credibly today!